A Major Disruptive Force In The Global Economy? Look No Further Than U.S. Oil Exports

A "pump jack" in Midland, Texas on the outskirts of town in the Permian Basin oil field. (Photo by Spencer Platt/Getty Images)

When we think of disruptive forces in the global economy, we often think of technological breakthroughs: ever-tinier and more powerful computer chips; medical miracles in implantable devices, surgeries or pills; digital platforms that threaten the taxi industry, the brick-and-mortar retail sector, the hospitality industry.

We don't often think of oil.

We should.

Oil is changing the world order, and more rapidly than might be initially apparent.

Maybe you are thinking of Tesla and Elon Musk, who dreams of a day when the electric engine supplants the internal combustion engine. Maybe you are thinking of Saudi Arabia and Crown Prince Mohammed bin Salman, who dreams of moving the kingdom past its oil dependency. Both men are massively disruptive, today, right now, to be sure.

But this story is about U.S. oil exports, which had been heavily restricted for four decades.

The seeds for this disruption were planted when the Obama administration lifted those restrictions, which grew out of the destabilizing 1973 Arab oil embargo, and the seedlings are breaking earth now, during the Trump administration.

In a year when U.S. exports are growing at their fastest pace since 2011, up 5.97%, oil exports are up almost 90%.

If oil exports continue to grow rapidly, the impact will be felt in the always-volatile Middle East, where many of the economies depend on the black gold that lies beneath their sandy soil. It will be felt in South America, where Venezuela is already a failing state. It will be felt to our north, in Canada, by far the largest single supplier of U.S. oil imports, and to our south, in Mexico, another major supplier. It will be felt in Russia, another key energy producer and a destabilizing force globally given its outsize aspirations.

U.S. oil exports totaled $13.5 billion through September, the most recent Census Bureau data available. With three months left to report, the total is already a record. In 2011, oil was the nation's 146th-ranked export. So far in 2017, it ranks 15th.

While Musk and the crown prince known as MBS dream of a world with oil's role greatly diminished, I am betting on oil, for both the short and medium term. Not necessarily the price; that's harder to predict.

I am betting on oil being around for decades to come as a key linchpin to the global economy -- and for the United States to become a more significant supplier of oil to its friends around the world. That presumes, of course, that President Trump can fight his inward-looking, nationalistic tendencies -- perhaps decreeing we cannot afford to export oil on national security grounds -- and his successors resuming the philosophy that had largely held sway for seven decades prior to his ascendancy to the presidency.

Here are the top 10 destinations for U.S. oil this year:

Canada, which receives more than 30% of U.S. exports, down 1.04%.

China, 19.27% of U.S. exports, up 1,708.97%.

United Kingdom, 7.97% and 518,18%.

The Netherlands, 6.96% and 77.02%.

South Korea, 4.89% and 772.33%.

Singapore, 3.74% and 206.16%.

Italy, 3.67% and 99.77%.

Japan, 2.90% and 297.49%.

Colombia, 2.76% and 207.33%.

India, 2.32%, with an increase from zero.

So far this year, the United States has sent oil to 31 nations. Not entirely impressive since there are more than 200 countries around the world. But impressive when you consider that the United States exported to 10 countries in 2015. Exports went to four nations in 2011, before the export restrictions were eased.

The one potential wrench-in-the-works could be problems with hydraulic fracturing -- a technological innovation that is behind the boom in oil exports. While the industry has largely withstood steep declines in the price of oil, becoming ever more efficient, it might have a challenge withstanding either repeated or a significant environmental accident. Fracking has been most readily accepted in Texas and, to some extent, North Dakota, with the most resistance in Pennsylvania.

The seaports that are benefiting the most, where most of the oil is departing, are in Texas -- five of the top 10 -- as well as Louisiana (2), North Dakota (2) and Michigan (1). The Port of Corpus Christi has accounted for $3.9 billion of the U.S. total this year, almost twice as much as the second-ranked seaport, Beaumont, Texas.

Oil exports remain relatively small when compared with oil imports, of course. Oil imports totaled $98.81 billion through the first nine months of the year, more than seven times the total value of exports. But the increase in the value of imports, at 36%, pales when compared with exports'.

There are many forces reshaping the global economy. Don't forget the role of U.S. oil exports.